Hawaii: My Mix Of Mai Tais And Tax Credits
First of all, CNBC needs to open a bureau in Hawaii and pay me $20 million to run it. Ok, now that I've stopped drinking Mai Tais, let me tell you some things I've learned about making money here.
Hawaii has what's called a 221 tax credit program, which provides 100 percent tax credits for tech investments and Hollywood productions. The state is trying to diversify its economy beyond tourism. Supporters say the credits have jump-started venture capital here from almost nothing to $820 million. The 287 companies receiving investments have spent $1 billion in Hawaii, while the state has lost $200 million in taxes. Sounds like a win-win.
But there is controversy. Some say too many credits have gone to investors who didn't really need them (and they end up selling them!), and the fear is that rather than turning Hawaii into the next Silicon Valley, the seed money will foster start-ups which then leave for the mainland.
So far, that hasn't happened in a meaningful way. Though we did profile Hoku Scientific which has benefitted from the credits, is building a huge polysilicon plant...in Idaho. Hey, it'll cost less to run the electricity-intensive plant on the mainland.
Finally, I heard a great story about learning to do business here. A veteran commercial real estate salesman told me he came here about 20 years ago. He's a native New Yorker who said that, at first, everyone in Hawaii hated him. He made a couple of mistakes. First, he kept trying to make, and keep, eye contact. For a lot of Hawaiians, that's kind of rude. One potential customer kept avoiding eye contact, looking down, and the salesman kept lowering himself in his chair to try to catch his eye. Eventually, the customer nearly had his nose on the table.
The second mistake he learned from: "People here don't like to be closed." The old, "Would you like that on Wednesday?" didn't work. Now, after 20 years, he says his most high pressure close line is, "So...what do you think?"
Meanwhile, you can check out the video I did from Hawaii this morning.
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